Campbell v. City of Kenosha

ERROR to the Circuit Court for the District of Wisconsin; the case being this:

The constitution of Wisconsin ordains:

'It shall be the duty of the legislature, and they are hereby empowered, to provide for the organization of cities and incorporated villages, and to restrict their power of taxation, assessment, borrowing money, contracting debts, and loaning their credit, so as to prevent abuses in assessments and taxation, and in contracting debts by such municipal corporations.'

With this provision in force, the legislature of the State, on the 22d March, 1853, authorized the city of Kenosha 'to issue the corporate bonds of the said city to the Kenosha & Beloit Railroad Company for the payment of a sum not exceeding $150,000.' It was provided, however, that no bonds should be issued under this act unless a majority of the legal voters voted in favor of it.

By section 8 of an act passed the next day, 'An act to amend the charter of the city of Kenosha,'-approved March 23d, 1853, the legislature enacted as follows:

'The city council shall have power to levy and collect special taxes for any purpose (aside from what may be specially provided for in the city charter) which may be considered essential to promote or secure the common interest of the city; or may borrow on the corporate credit of the city for such purposes, any sum of money for any term of time, at any rate of interest not exceeding ten per centum, and payable at any place that may be deemed expedient.'

This act also provided that no tax should be levied or money borrowed, unless in accordance with a certain section-'section 44 of 'An act to incorporate the city of Kenosha," (the original city charter),-a section which, like one in the first-named act, provided for a submission of the matter to a vote of the people; when the amount and object of the proposed tax or loan to be voted upon should be specifically stated.

In this state of statutory enactments, the city, in August, 1855, passed an ordinance:

'That under and in accordance with section 8 of 'An act to amend the charter of the city of Kenosha,' approved March 23d, 1853, and section 44 of the 'Act to incorporate the city of Kenosha,' a question shall be submitted to the legal voters whether a tax to the amount of one hundred and fifty thousand dollars shall be levied and collected for the promotion of the common interest of the city in aid of the Kenosha and Beloit Railroad.'

The question of the tax and loan was thus submitted, the reader will observe, under the act of March 25d, amendatory of the charter, and not under that of March 22d, authorizing a subscription for a specific sum, $150,000.

A majority of the voters having voted for the subscription, under the ordinance just quoted, the city issued scrip, in the form of small drafts, by the mayor and clerk, on the city treasurer, for different sums of money payable 'out of any funds in the treasury belonging to the city, the same having been allowed for scrip in aid of the Kenosha and Beloit Railroad Company.'

In 1857, the next year after the city had thus subscribed for stock and issued its scrip, and so become a stockholder in the new railroad, the legislature passed an act giving a revised charter to the city, which it accepted. This new charter provided that a railroad commissioner should be annually elected thereafter as a city officer, and, prescribing his duties, proceeded:

'He shall have, generally, the charge and control of all interest the city of Kenosha now has, or may hereafter have, in the Kenosha and Beloit Railroad. He shall receive all funds paid into the hands of the city treasurer, on account of the tax for the benefit of the Kenosha and Beloit Railroad Company, and shall hereafter redeem all scrip which has been issued to said railroad company, as the same becomes due, making such provision therefor, or recommending such measures to the common council as he may deem necessary for the benefit of the tax-payers of the city.'

The scrip issued as above-mentioned was not paid at its maturity, and, in 1859, the city councils of Kenosha made arrangements by which the city obtained from the holders of it an enlargement of the time of payment. Being at the efflux of the enlarged term still unpaid, one Campbell, who held a quantity of it, brought suit in the Circuit Court for Missouri against the city.

On the trial the holder of the scrip offered the same in evidence. The city objected to its reception on the ground that section 8 of the act to amend the charter of the city of Kenosha, approved March 23d, 1853, and also the ordinance and other proceedings under it, were void, as being in contravention of the constitution of the State of Wisconsion. And that the scrip had not been validated either by the subsequent act of 1857, making it the duty of the railroad commissioner to redeem the scrip, nor by the proceeding of the city council in 1859, procuring an enlargement of the time; inasmuch as it was not in the power of either the city council or of the legislature itself, to give validity to that which was, by the constitution, void.

The court sustained the objection, and judgment was given for the city.

Mr. Cary, for the city and in support of the judgment:

It will be conceded that under no act of legislature in this case, could the bonds be valid without a previous submission of the question of their issue to the people, and an approval of such issue by them. Now the only question of this sort submitted to them was 'under and in accordance with section 5 of an act to amend the city of Kenosha, &c., approved March 23d, 1853.'

This act, therefore, of March 22d, 1853, authorizing the city to subscribe to 'a sum not exceeding $150,000,' has no reference to the matter in dispute, and is out of the case.

That section 8 of the act of March 23d, is a violation of the provision of the constitution which says, that it shall be the duty of the legislature to restrict the power of cities to contract debts, so as to prevent abuses in that matter by them, is clear. It looks as if it were made in studied defiance of the constitution. Over and above what the charter authorizes, cities, under the act, may borrow any sum for any time, payable anywhere, and pretty much at any rate of interest.

As an orginal proposition, it would be the duty of this court to hold this section unconstitutional and void.

But the question is not an open one in this court. It has already been passed upon by the Supreme Court of the State of Wisconsin.

In Foster v. The City of Kenosha, a party sought to enjoin the city of Kenosha from collecting a certain tax levied upon real estate in the said city, for the purpose of paying this identical scrip and the remainder of the same issue, and an injunction was obtained, restraining its collection. On appeal to the Supreme Court of the State the judgment was affirmed, on the ground that the section was in conflict with the constitution of Wisconsin and void.

We need not say that the construction given to a statute of a State by the highest judicial tribunal of such State is regarded as a part of the statute, and is binding upon the courts of the United States. This is settled law.

The issue of the scrip then was not the case of a power granted by the legislature, and defectively or improperly executed, but was a void act, an act void in toto; void in its inception, execution, and result.

If this is so, certainly no ratification of it by the city council would make it valid. The council could give no more validity to the scrip by ratifying it than they did by issuing it. What they meant and wished was plain by the latter act; but their meanings and wishes are of no importance, the constitution intervening.

But could they ratify the scrip even had the legislature attempted to confer upon them the power? Could they, by mere ratification, make valid what was before void in toto and of no binding force whatever? Did mere change of the scrip change its character in respect to obligation? Void in its inception, would not nullity follow all its mutations?

But did the legislature ever ratify or direct the councils to ratify the debt? The act of the legislature providing for the election of a railroad commissioner certainly does not ratify the debt expressly.

And in regard to a debt which, by the constitution, was forbidden to be contracted, and was void in toto, how can a ratification be implied merely?

The meaning of the act was, that the commissioner 'shall pay it;' assuming it, of course, to be valid; issued according to law, held by honest holders, and having the other requisites required by courts to give force to obligations: not to say that he 'shall pay' all the drafts which, by being signed, were 'scrip,' constitutional or unconstitutional, legal or illegal, honestly held or dishonestly held. Such a construction would be very forced.

The provision of the constitution is in restraint of municipal corporations embarking in wild schemes of adventure under the fancy of improvements, and is a wise one. It has become a necessary protection to holders of property and payers of taxes. It ought not to be made nugatory by judicial legislation.

The judgment should therefore be affirmed.

Mr. Lynde, contra, for the creditor.

Mr. Justice DAVIS delivered the opinion of the court.